Alberta Premier Alison Redford during her state-of-the-province address said the low price of bitumen has affected budget revenues.Government of Alberta
/ Calgary Herald

Reporters in Calgary watch on monitors as Alberta Premier Alison Redford addresses the province Thursday evening. Redford is warning of tough fiscal times and multibillion-dollar shortfalls ahead due to falling prices for oilsands bitumen.Jeff McIntosh
/ THE CANADIAN PRESS

Alison Redford told Albertans in her Thursday evening TV address that she will hold an economic summit next month to seek solutions to the province’s economic challenges.

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EDMONTON — A dramatic drop in the price Alberta oilsands companies receive for their product will strip about $6 billion in resource royalties from the coming 2013-14 budget, Premier Alison Redford revealed Thursday in a televised state of the province address.

“This bitumen bubble means the Alberta government will collect about $6 billion less in revenue this year alone,” Redford said in a taped eight-minute video clip shot in her Calgary home last Friday. “To put that into context, that’s the equivalent to all our government’s spending on education each year. So as we prepare for this year’s budget, it means we have to make some very difficult choices.”

The slumping price for bitumen has already cost the provincial treasury about $1 billion in the fiscal year ending March 31, Redford said.

The price differential will drop projected resource revenue in 2013-14 to about $7 billion, the lowest point since 2009, when natural gas prices plunged.

Without revealing details or a specific plan for how her Conservative government will meet that challenge, Redford vowed to be “thoughtful” and to deliver services that support families and communities.

“It’s not good enough to simply take an axe to government spending across the board,” she said. “That would mean vulnerable Albertans get hit the hardest. And it is not good enough to take the easy way out and raise taxes.”

But she warned that holding the line on spending, when 95,000 new Albertans arrive every year, will mean difficult choices.

“So while it may sound relatively painless to hold overall spending levels, it’s not,” she said. “As a result, some programs and services will change, especially those that are not sustainable over the long term.”

She said Alberta must find a way to get a better price for bitumen, but it won’t happen overnight.

Borrowing a page from Ralph Klein’s playbook, Redford will host a one-day economic summit next month to bring together experts and average Albertans together to seek solutions to the province’s economic challenges.

She said it will be the first of a series of annual summits that will continue a conversation about reducing Alberta’s dependence on non-renewable resource revenues, addressing the bitumen bubble and working toward diversifying Alberta’s economy.

“It is a chance to continue the conversation around some of the new thinking and solutions to some of the ongoing challenges,” said her spokesman, Stefan Baranski.

Alberta Liberal Leader Raj Sherman called the premier’s $55,000 televised address a waste of taxpayers’ dollars and a blatant attempt to skirt the democratic process.

“The appropriate place for this rhetoric is in the legislature at the Speech from the Throne and on budget day,” said Sherman in a news release.

Health Sciences Association president Elisabeth Ballermann said Albertans should not be told they can’t get an ambulance or can’t get the cancer treatment they need because oil prices are down this month.

“The truth is that our health-care system is under-resourced because for decades the government has chosen to give unnecessary tax and royalty breaks to rich corporations and individuals,” she said in a release. “Albertans have made it clear time after time that they favour a fairer tax system over a failing health-care system.”

Alberta Union of Provincial Employees president Guy Smith said Albertans want stable programs that support our quality of life.

He said the premier has promised Albertans that important programs like health care and education will not be harmed, but dozens of nurses are being laid off in Edmonton and 49 seniors care beds are being closed in Red Deer.

“Albertans expect and deserve stability not just in health care, but all services,” the head of Alberta’s largest civil service union said in a news release. “If we don’t support our growth with quality services, we will lose the people who make it possible.”

Redford has conceded her government must rein in spending.

But her 2012-13 budget forecast expenses to jump $1.3 billion to $41.1 billion with promises of $2 billion more for municipalities, a $400 per month hike for recipients of the Assured Income for the Severely Handicapped (AISH) and promised funding for schools, family care clinics, mental health and addictions services.

A report released Wednesday by the Conference Board of Canada noted the province is headed toward another deficit of $3 billion this fiscal year, despite projected economic growth in Alberta of three per cent and the unemployment rate dropping to 4.8 per cent.

The research organization says Alberta should save more of its energy royalties, rather than spending it on daily operating bills.

Economists have been warning Alberta Conservative governments for years to wean themselves off non-renewable resource revenues and look at other more stable sources of revenue, such as taxation.

But a poll of Albertans last month found little appetite for tax increases.

Pollster Marc Henry with ThinkHQ Public Affairs said that if the government wanted to institute a sales tax, it would have to convince the public it has a revenue problem, not a spending problem — something it hasn’t done yet.

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